Friday, December 12–Berlin Electric Customers Likely To See Rate Increase

BERLIN – A 2-percent increase in the electric power base rate could show up in Berlin power bills as early as January, if the Maryland Public Service Commission (PSC) signs off on the change.

The higher rate would be instituted to recover over $400,000 in under-collected power cost fees.

The PSC will issue a written response in a few weeks to the town’s proposal, which also seeks to reduce the impact of the unrecovered funds by absorbing half, and spreading the recovery effort out over two years.

Berlin electric bills will likely include the base rate increase in the January bills, if the town’s request is approved.

The average home, using 867 kilowatt hours, would see its electric bill rise by $4.46 a month with the new base rate, said Berlin Finance Director Jo-Ellen Mason-Foley. Without the town’s attempt to soften the blow, the average house would face an increase of about $20 a month. The difference is half a cent per kilowatt-hour more, as opposed to two cents per kilowatt-hour more.

“It is quite a savings to the consumer,” Mason-Foley said.

The base rate could have been increased by as much as 11 percent, according to Mayor Gee Williams, if the town had not made this particular proposal to the PSC.

The PSC must also approve the town’s request to absorb half the bill for the recovery and to spread the recovery of the $400,000, half the actual power costs to customers, over the next 24 months instead of the usual 12 months.

The Power Cost Adjustment (PCA) charge will remain unknown until a power purchase agreement contract is concluded, at which point Berlin will know the difference between the base electric rate, and the cost per kilowatt-hour under the contract.

“There’s a lot to this. It’s not the simple little operation people have believed all this time,” Williams said.

The town asked for the special treatment to reduce the impact of high power costs on electric customers.

“The Mayor and Council feel that the electric ratepayers have already been burdened enough from the extremely high costs in purchased power we experienced this past year. The request we made of the Public Service Commission pushes to the limit what we can do within the framework of state regulations and responsible financial stewardship,” Williams said.

Williams said that the PSC’s hearing examiner expressed support for the proposal, as did the attorney for the Maryland People’s Council.

Berlin’s ongoing efforts to find a reasonable power purchase agreement were also mentioned at the hearing in support of Berlin’s request to show that Berlin is taking steps on its own to reduce costs to consumers.

“We are optimistic that our request to mitigate the under-recovery to the maximum and minimize the impact on town electric ratepayers, as much as the regulatory system will allow, will be looked upon favorably by the Public Service Commission,” said Williams.

Berlin is looking for power cost relief through a power purchase agreement that would lock-in power costs for one or two years.

With at least two bids for a power purchase agreement in hand, Berlin officials said this week they are anxious to assess the bids and award the contract.

“Time is of the essence. Bids have started to come back,” said Williams. “I know the BUC [Berlin Utilities Commission] wants to start reviewing those bids and find out where we stand.”

The town requested bids from three power companies; if none of those bids are satisfactory, Berlin would need to cast a wider net.

The council debated the cost of the specialist attorney necessary for power contract negotiations Monday night, with Council member Paula Lynch balking at attorney Gary Newell’s fees.

“We promised people we’d get something done. We have to have legal representation to negotiate any of those agreements,” Williams said. “We can’t not do it.”

Asking for an estimate of hours or setting a not-to-exceed figure would be counterproductive, the council concluded.

“We are in such a box here. We’ve got to get moving,” Lynch said.

The power purchase agreement could be in place as early as late January or the beginning of February.

Electric customers will see some immediate relief in their December bills, which will drop about $38 for the average household based on a lower actual power cost, shown as the ACA on electric bills. The ACA dropped from 11.4 cents per kilowatt-hour to 6.5 cents per kilowatt-hour.

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